Income taxes impose steeper economic costs, and often steeper administrative and compliance costs, than consumption taxes. Moving to a consumption tax would end the tax bias against saving and investment and provide an opportunity to greatly simplify anti-poverty programs embedded in the tax code.
The federal tax code remains a major source of frustration and controversy for Americans, and a hindrance to economic growth and opportunity. Other countries, such as Estonia, have proven that sufficient tax revenue can be collected in a less frustrating and more efficient way.
As fiscal year 2023 draws to a close, North Carolina’s House and Senate have each passed their own versions of the biennial budget for fiscal years 2024-25. While legislative leaders have generally agreed to overall spending levels, negotiations remain ongoing to resolve different approaches to tax policy.
Rather than continue down the path of growing debt, lawmakers should craft a comprehensive solution. International experience cautions against tax-based fiscal consolidations, but modest tax increases may be part of a successful debt reduction package.
If Wisconsin policymakers return some of the projected continued revenue growth to taxpayers in a structurally sound and pro-growth manner, those tax cuts will benefit businesses and individuals throughout the state, leading to more innovation, more job and wage growth, more economic opportunities, and more vibrant communities.
When a country has a broad base with a simple and transparent tax code, small rate changes have little influence. Therefore, policymakers shouldn’t only focus on rate changes when it comes to increasing tax competitiveness.
The changes put forth in a new package of bills would represent significant pro-growth change for Oklahoma that would set the state up for success in an increasingly competitive tax landscape.
The proposed reforms would be welcome changes to the Commonwealth’s tax code, but the economic principles behind the reforms also have important implications for the Bay State’s income tax system writ large.
As Kansas legislators consider additional tax policy changes this legislative session, they should prioritize economic growth and a structurally sound tax code.
Crafting a hybrid bill for a low, flat rate on a broad base—with well-designed revenue triggers to responsibly reduce rates in the future—could be an ideal way forward for the North Dakota Senate.
By shifting to a flat income tax, Georgia has already made an important commitment to tax competitiveness. Although the state’s top rate threshold is already very low, a true single-rate income tax will help protect taxpayers from inflation-related tax increases and provide a buffer against rising tax rates in the future. To combine responsible rate reductions with these benefits, Georgia should create tax triggers that empower the state to keep pace with its competition.
Most of the 2023 state tax changes represent net tax reductions, the result of an unprecedented wave of rate reductions and other tax cuts in the past two years as states respond to burgeoning revenues, greater tax competition in an era of enhanced mobility, and the impact of high inflation on residents.
On Election Day, a narrow majority of Massachusetts voters approved Question 1, also known as the Fair Share Amendment, which will transition the Commonwealth from a flat rate individual income tax to a graduated rate system.
In what is already a year of significant bipartisan focus on tax relief, 2022 is launching something of a flat tax revolution by reforming income taxes.
With increases to the standard deduction, a flat tax could provide a net tax cut to taxpayers of all income levels, providing both short-term and long-term relief to taxpayers across the income spectrum. It would also simplify the tax code in ways that encourage greater investment and economic growth, particularly by ensuring that the marginal rate on small business investment is competitive with peer states.
Massachusetts’ competitive tax advantage in New England is driven primarily by its competitive individual income tax rate and its sales and use tax structure. If the Commonwealth changes its tax code in ways that narrow the base or increase the rate, it cedes greater tax competitiveness to other states, regionally and nationally.
As Idaho attempts to further solidify its position as a growth-oriented, taxpayer-friendly state this special session, other states should look to its example and pursue similar reforms.
As Missouri legislators head into a special session, they should consider making a pro-growth change that the state is already so close to achieving: creating a flat income tax.
Given the state’s strong budget surplus and projected continued revenue growth, Wisconsin is in a prime position to enact pro-growth reforms to improve the state’s competitive standing for decades to come.